Weekly Feed Market Commentary
Published 16 July 14
The downward price trend has continued throughout the past week and UK feed wheat prices closed at another new contract low of at £128.80/t on Tuesday (15 July), down £4.20/t on the previous week.
Dec-14 Chicago wheat prices also hit a new contract low on Friday (11 July), at $201.24/t, falling $12.04/t since the beginning of the week. Prices settled up slightly on Tuesday at $206.11/t. Following the trend, Nov-14 Chicago maize futures also hit a contract low on Friday, at $151.48/t, prices settled at $150.29/t at Tuesday’s close.
Sentiment towards global crop production remains positive with the downward trend continuing in prices. Last week, the European Commission projected that the EU soft wheat crop would increase by 1.9% from 2013/14 to 139Mt which is 7% above the five year average.
The release of the July USDA report on Friday continued to provide bearish news for the market as 2013/14 global maize production was increased on the back of higher Brazilian output (+2Mt). US wheat output was increased 1.4Mt to 54.2Mt as Hard Red Spring wheat crops in northern areas benefitted from ample soil moisture and cooler than normal early summer temperatures. Favourable growing conditions were cited as the reasons behind a 1.6Mt increase to EU total wheat production (now at 147.9Mt) and 1Mt increase for Ukraine to 21Mt.
The annual AHDB/HGCA Planting and Variety Survey estimates the total GB area planted to cereals and oilseed rape, for harvest this year at 3.91Mha which is up 6% from 2013. The total wheat area is at 1.96Mha, up 22% and the barley and oat areas are down on results from 2013. Read more on the HGCA website.
Global oilseed prices remain in their established downward trend with strong supply forecasts for 2014 acting as the topic of focus – demand and trade should become weightier drivers once production levels are established post-harvest. Paris Nov-14 rapeseed futures traded below the €330/t level for the first time on Friday, but have since recovered slightly, Nov-14 Paris rapeseed futures closed at €330.25/t on Tuesday, down €8.75/t since the previous week.
The monthly USDA supply and demand report on Friday was a further negative driver with global and US soyabean stocks revised higher. For 2014/15, the main change was the increase to US production as the USDA incorporated the higher planted area figure from last week’s Acreage report. The result was a 4.5Mt increase to US soyabean output (assuming trend yields) to 103.4Mt – further into record territory.
Although demand figures were also increased for the US (+1.1Mt) and China (+1Mt), met by higher imports now at 73Mt, it was not enough to offset the higher production. Consequently, global soyabean stocks are now projected to reach 85Mt by the end of 2014/15, compared to 67Mt at the end of 2013/14 and 56.8Mt at the end of 2012/13. Prices for Chicago soyabeans closed on Tuesday at $399.09/t, down $11.02/t from the previous week.
UK Hi-Pro soyameal prices (Ex-store, east-coast) were £315/t as at 11 July, down £14/t from the previous week. UK rapemeal prices (34%, ex-mill, Erith, July delivery) also declined £4/t over the week, prices closed on Friday at £180/t.
Figures and commentary provided in association with HGCA and BPEX.
For further information on the cereals market click here to link through to HGCA website.